Excessive Pride and Overconfidence

FRIDAY REVIEW - Ok...so here's the deal. I'll be looking to trade over the coming sessions and that trade, might even come in the form of a US Dollar long position. Now, it's important I stress, any long US Dollar position over the coming sessions, will be short term in nature. I still see the US Dollar extending declines now that it has broken down again, as best reflected through price action in EURUSD and GBPUSD, but at the same time, this doesn't mean there won't be corrections of a couple hundred points along the way. And so, if we see some super extended readings on an intraday basis, we could be taking a long Dollar position. Once initiated, the strategy will be to look for immediate follow through, while reducing risk within a 24 hour window. Some of the best counter-trend opportunities come when markets are trending and we will look to take advantage.

WHAT'S NEXT? - As far as the outlook for the Yen goes, I continue to see risk for additional upside (USDJPY) lower, even if the Dollar starts to recover against the Euro and Pound. This has everything to do with the meltup in stocks and what should be a sharp decline on a short term basis, at the very minimum. The Yen has been strong despite the continued run in stocks, which has been interesting to see, and when stocks do start to roll over, I suspect the Yen will appreciate that much faster, which means USDJPY could sink back down into the 107.00-108.00 area in no time. We caught a very nice move in USDJPY from the 112.60 area and I will be happy to jump back into the position when the next opportunity presents. In a world where risk off flow may not even be so US Dollar supportive any longer, considering US soft Dollar policy, this will only attract more Yen interest in a flight to safety environment.

The US Dollar is getting hammered and is at risk for another big drop.

WHEN IT COMES DOWN TO IT - As far as the world of bitcoin and cyrpto go, I'm disturbed with the level of hubris within the community. This is a level of excessive pride and overconfidence that warns of major danger ahead. While I would qualify that I'm a big believer in the innovation that will come from the blockchain, I think this community has failed to consider that a good portion of the run in crypto has been an extension of a central bank induced stock market investor mentality, where investors believe they're immune to any and all downside risk. What's even more fascinating and somewhat ironic, is that bitcoin was born out of a distrust of central banks, only to greatly benefit from an environment that has never been more supportive of excessive investment in risk. My point here is that cryptocurrencies have never known downturns. Bitcoin came on the scene at the exact same time governments and central banks stepped in to stimulate the global economy. The timing for bitcoin could not have been better. And so, I'll be looking for a big shakeup here as well and hopefully, there will be amazing opportunities to take advantage into the dip.

I am a seasoned currency strategist and professional trader. I have worked for investment banks, fixed income research advisories and a leading foreign exchange brokerage. In 2012, I set up JKonFX.com to offer my daily insights and trading strategies.